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Trees can be considered as investments made by economic agents to prevent depreciation of natural assets such as stocks of top soil andwater. In agroforestry systems farmers use trees in this manner by deliberately combining them with agricultural crops on the same unit ofland. Although advocates of agroforestry have asserted that soil conservation is one of its primary benefits, empirical estimates of thesebenefits have been lacking due to temporal and spatial complexity of agroforestry systems and the nonmarket aspect of soil capital assets.This study designs and applies a bio-economic framework for valuing the soil conservation benefits of agroforestry. The framework is testedwith econometric analysis of data from surveys of households in Eastern Visayas, Philippines, where USAID /Government of Philippinesintroduced contour hedgerow agroforestry in 1983. By constructing a weighted soil quality index that also incorporates measures of soilfertility, texture and color in addition to erosion, we extend previous economic studies of soil resources. This index is regressed on a varietyof farming and site specific bio-physical variables. Next, we use a Cobb-Douglas profit function to directly relate agricultural profits andsoil quality. Thus, the value of soil conservation is measured as a quasi-rent differential or the share of producer surplus associated with achange in soil quality. Because this framework assumes the existence of markets, the assumption is tested by analysing the statisticalsignificance of consumption side variables, e.g., number of household members, on production side variables, e.g., profits. Instrumentalvariables are used to handle the endogeneity of the soil index in the profit equation. Seemingly unrelated regression (SUR) analysis is usedto accommodate correlation of errors across the soil and profit equations. Regression results reveal the importance of agroforestry intensity,private ownership, land fragmentation, and familiarity with soil conservation as positive covariates of soil quality. Analysis of productiondata indicate the importance of market prices, education, farming experience, farm size, topography, and soil quality as positive covariatesof household profits. Investments in agroforestry to improve or maintain soil capital can increased annual agricultural profits by US$53 forthe typical household, which is 6% of total income. However, there are significant up-front costs. Given that small farmers in tropicaluplands are important players in the management of deteriorating soil and forest resources, policy makers may want to consider supportingfarmers in the early years of agroforestry adoption.

Subject(s): Crop Production/Industries

Production Economics

Issue Date: 1998-01

Publication Type: Journal Article

PURL Identifier: http://purl.umn.edu/174329 Published in: Agricultural Economics: The Journal of the International Association of Agricultural Economists, Volume 18, Issue 1 Page range: 31-46

Total Pages: 16

Record appears in: International Association of Agricultural Economists (IAAE) > Agricultural Economics: The Journal of the International Association of Agricultural Economists





Autor: Pattanayak, Subhrendu ; Mercer, D. Evan

Fuente: http://ageconsearch.umn.edu/record/174329?ln=en







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